Why China is in no hurry with the "Power of Siberia-2"

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to RBC on export prices for Russian gas to China and the reasons why the contract for the construction of the Power of Siberia 2 gas pipeline has not yet been signed.

As Alexey Belogoryev notes, participants in the gas industry and the expert community initially did not expect that during the last visit of the Russian leader to China it would be possible to move forward in negotiations on the project. According to the analyst, the absence of a breakthrough in the near future is also confirmed by the plans for the Chinese 15th five-year plan (2026-2030) approved in March 2026. It mentions China's intention to advance the initial stage of work on the Power of Siberia-2, but the wording is chosen "in an extremely non-binding way," Belogoryev believes.

The analyst is confident that linking to spot indicators, as in Europe, is excluded for such a contract. A more likely option is to link to the cost of coal as a substitute commodity or to a basket of petroleum products by analogy with the current "Power of Siberia". Gazprom does not disclose the price at which it supplies gas through this pipeline. According to the expert, based on a comparison of customs data, it can be concluded that the price formula is linked to the cost of petroleum products and changes along with the price of oil with a nine-month lag.

At the same time, it is important which slope (the coefficient for calculating the price of gas from the price of oil) is included in the contract, says Belogoryev.

At the same time, Gazprom needs legal guarantees that China will buy the declared volumes over a long period of time to start construction, the analyst adds. Since the Russian company requires CNPC to guarantee the purchase of all 50 billion cubic meters per year is on the horizon for 15-20 years, China insists on discounts in return.

Pros and cons for Russia

According to Belogoryev, the Forces of Siberia-2 project, even with its first configurations in various versions, which have been discussed since the 1990s, caused controversy within the country.

"It has always been criticized for dependence on one importer, because the importer can dictate its terms, including changing them. And this is typical of China. Therefore, getting into such dependence is an objective economic risk," the expert says.

At the same time, this risk could be offset by high prices. The expert admits that to some extent the project is important from the point of view of maintaining investments in the gas industry and possible associated development of gasification in Southeastern Siberia, primarily the Krasnoyarsk agglomeration.